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Issue #590 | Perishables | Mediterranean | Middle East | Africa Trade

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2014 Media Kit
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Maersk plans alliance with two biggest shipping rivals

By: | at 08:00 PM | Liner Shipping  

The world’s three biggest container shipping companies, including Maersk Line, have agreed to share vessels in a bid to minimize losses caused by over capacity and falling freight rates.

Maersk Line said it has agreed an operating alliance with its two biggest rivals, MSC Mediterranean Shipping Company S.A. and CMA CGM.

The three groups, which together account for just short of 40 per cent of global container capacity, aim to start offering sailings on each others ships via a joint operating centre in the second quarter of next year.

The alliance would need approval from EU competition authorities, as well as regulators in other countries including the United States, China and Brazil, Maersk said.

Container shipping, which transports goods such as electrical appliances, furniture, textiles and toys, has been battered by over capacity, weak economies and cut-throat competition.

Freight rates for transporting standard 20-foot containers from ports in Asia to Europe, one of the world’s busiest trade routes, have plunged around 60 percent since mid-March as a result of a price war.

“Declining volume growth and over-capacity in recent years have underlined the need to improve operations and efficiency in the industry,” Maersk Line said.

Last week, the company unveiled the world’s biggest container ship, hoping a new fleet of super-size vessels will deliver savings and return it to profit.

Analysts said the companies will likely face difficulties in getting regulatory clearance for their alliance.

“After all, this is about 40 percent of the world’s container capacity now forming an alliance,” Sydbank analyst Jacob Pedersen said.

“It would be naive to answer no to the question as to whether they will run into problems,” Pedersen said.

Alm Brand analyst Jesper Christensen said regulators could impose conditions on the arrangement.

Maersk Line said it has had initial talks with competition authorities in the EU, the United States and China and is confident the alliance will be cleared.

The alliance, to be called the P3, will consist of 255 vessels with a total capacity of 2.6 million Twenty Foot Equivalent Units (TEU), serving the Asia-Europe, Transpacific, and Transatlantic (North Europe and Mediterranean) routes, Maersk Line said.

Maersk Line will contribute more than 100 vessels and the three lines will continue to have fully independent sales, marketing and customer service functions. (Reuters)